Two Indian-American executives convicted in billion-dollar corporate fraud scheme

NEW YORK, April 13 (VOICE) Two Indian-American executives of a Chicago-based health tech start-up have been sued in a billion-dollar fraud scheme targeting the company’s clients, lenders and investors. was convicted of involvement.

Rishi Shah, 37, co-founder and former CEO Shradha Agarwal, 37, former president, Brad Purdy, 33, former chief operating officer charged with defrauding Outcome Health lenders and investors Convicted.

The Shah was found guilty of five counts of mail fraud, ten counts of wire fraud, two counts of bank fraud and two counts of money laundering, according to a Justice Department statement.

Agarwal was found guilty of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud, while Purdy was found guilty of five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of bank fraud. received. False declarations to financial institutions.

Defendants face up to 30 years in prison for each count of bank fraud and up to 20 years in prison for each count of wire fraud and mail fraud.

Purdy faces up to 30 years in prison for making false reports to financial institutions. The Shah faces up to his 10-year prison sentence for each money laundering charge.

Outcome installed TV screens and tablets in doctors’ offices across the United States and sold advertising space on those devices to clients, according to a Justice Department release. Most of our clients were pharmaceutical companies.

Evidence presented at trial indicated that Shah, Agarwal and Purdi sold Ad inventory they didn’t need to Outcome’s clients, which was then poorly delivered in their ad campaigns.

Despite these underdeliveries, the company continued to invoice customers as if they had delivered in full.

These three lied or tricked others into lying to cover up underdelivery from their clients, whether the company was delivering advertising content to the number of screens specified in the client’s contract. made it look like

Outcome’s Purdy et al. also inflated a metric that purports to show how often patients are using the company’s tablets installed in clinics.

According to court evidence, the scheme targeting Outcome’s clients began in 2011 and lasted until 2017, resulting in overcharges for advertising services of at least $45 million.

Outcome’s underdelivery to ad clients led to significantly overstated Outcome revenue in 2015 and 2016.

The company’s external auditors have approved the sales figures for 2015 and 2016. This is because Purdy concealed undelivered deliveries from auditors by having others falsify the data.

The trio then used inflated earnings figures from Outcome’s 2015 and 2016 audited financial statements to raise $110 million in debt financing in April 2016 and $3 million in December 2016. Raised $75 million in debt financing and $487.5 million in equity financing in early 2017.

They lied to investors and lenders to cover up the continued underdelivery of their advertising campaigns to their customers.

Shah and Purdy also misrepresented the effectiveness of Outcome’s advertising campaigns to investors by hiding the fact that they failed to deliver on their return on investment promises to their clients.

The $110 million debt financing resulted in a $30.2 million dividend to Shah and a $7.5 million dividend to Agarwal. The $487.5 million equity financing gave Shah and Agarwal his $225 million dividend.

Three other former Outcome employees pleaded guilty before trial.

Former Chief Growth Officer Ashik Desai pleaded guilty to one count of wire fraud. Former senior analyst Katherine Choi and former analyst Oliver Han pleaded guilty to conspiracy to commit wire fraud.

Desai, Choi and Han will be sentenced at a later date.